Quick Answer
If you own or operate a US business and have signature authority over any account held outside the United States, the FBAR very likely applies to you, including accounts whose money is not yours. Business owners also frequently face Form 5472 if a foreign person owns part of a US LLC, and Form 8938 under FATCA. The three have different thresholds and different penalties, and the Form 5472 penalty alone starts at $25,000 per year.
Does the FBAR Apply to My Business Accounts?
Yes, and the reach is wider than most owners expect.
The FBAR is not limited to personal savings. It captures foreign financial accounts held by your business, foreign accounts you can direct even when you do not own them, and your personal foreign accounts, all measured against a single combined threshold of $10,000.
For an Indian business owner in the US, the accounts that typically come into play are an operating account for a development team or back office in India, a current account for a family business you remain connected to, an escrow or vendor account used for supplier payments, plus the personal NRE, NRO and fixed deposit accounts most owners still hold.
The reporting entity matters as well. Depending on structure, an FBAR may be required from the business, from you personally, or from both. Getting that determination wrong is a common and avoidable source of exposure.
What Is Signature Authority, and Why Does It Catch Owners Out?
Signature authority is the single most overlooked trigger in this area, and it is worth being precise about.
You have signature authority over an account when you can control what happens to the money in it, whether by signature, by online access, or by direct instruction to the institution. Ownership is irrelevant. It is control that creates the reporting obligation.
The practical consequences catch people out constantly. A director on a family company's Indian bank mandate has signature authority. A US-based founder who can approve payroll for an Indian subsidiary has it. So does an owner named on a parent's account for practical reasons, and a partner listed on a firm account in India who has never personally moved a rupee through it.
In each case the account is reportable, and in each case the owner is usually astonished to hear it. The good news is that reporting an account you do not own creates no tax consequence. It is disclosure, nothing more. The cost of missing it is what hurts.
How Do FBAR, Form 5472 and Form 8938 Differ?
These three get conflated constantly, and the differences are where the risk sits.
FBAR, FinCEN Form 114. Filed with FinCEN through the BSA E-Filing System, separately from your tax return. Triggered when foreign accounts total more than $10,000 at any point in the year. It reports accounts.
Form 8938, FATCA. Filed with your tax return, not separately. Higher thresholds that vary with filing status and whether you live abroad. It reports foreign financial assets, a broader category than accounts, so it can pick up holdings the FBAR does not.
Form 5472. A different animal entirely. It applies to a US corporation with 25% foreign ownership, and to a foreign-owned single-member US LLC. It reports transactions between the business and its related foreign parties, not balances.
The critical point is that these are not alternatives. Many Indian business owners in the US owe all three, and filing one correctly does nothing to satisfy the others.
How Do the Penalties Stack Up?
Individually each penalty is serious. The reason business owners need to look at them together is that they compound.
For the FBAR in 2026, non-willful exposure runs up to $16,536, applied per form per year following Bittner v. United States in 2023. Willful exposure is the greater of $165,353 or 50% of the account balance, applied per account, per year.
Form 5472 is where the arithmetic turns severe. The penalty starts at $25,000 per form, per year, and it is not scaled to the size of the transaction or the profitability of the business. A dormant foreign-owned LLC with almost no activity still carries it. Continued failure after notice adds further amounts.
Form 8938 carries its own penalty starting at $10,000, with more for continued failure after notice.
A foreign-owned LLC that has been quietly non-compliant for four years is therefore not looking at one penalty. It is looking at several, running in parallel, across multiple years. That is the specific risk this article exists to flag.
What Does This Look Like in Practice?
Consider a consultant who incorporated a single-member LLC in California and delivers work for US clients through a small team in Pune.
He holds a current account in India that funds the team, typically carrying between $15,000 and $30,000. He is also named on his family's business account in Ahmedabad, which he has never used. Personally, he holds an NRO account and two fixed deposits.
He files his US return on time each year and pays what he owes. He has never filed an FBAR, because he thinks of the Indian account as a business account rather than a personal one, and he has never heard of Form 5472.
The reality is that the combined balances cleared the FBAR threshold years ago, the family account is reportable through signature authority alone, and if any part of his LLC is foreign-owned, Form 5472 has been due each year as well. None of this involves any wrongdoing. All of it is expensive to leave alone, and straightforward to correct.
How Does Year-Round Bookkeeping Prevent This?
Almost every case we see has the same root cause. Compliance was treated as an annual event rather than a continuous record.
The FBAR asks for the highest balance each account reached during the year. If nobody was tracking balances through the year, that number has to be reconstructed afterwards from statements, which is slow, error-prone, and sometimes impossible for closed accounts.
Form 5472 asks for related-party transactions. If loans between the owner and the business, capital contributions, and cross-border payments were not categorized as they occurred, they have to be untangled retrospectively.
When bookkeeping and compliance sit with the same firm, this stops being a scramble. Foreign accounts are on a register. Related-party transactions are tagged when they are booked. The threshold question is answered continuously instead of once a year in April.
Libre Professional Services provides bookkeeping, accounting and tax for business owners, including those with cross-border operations. To review where your business stands, call (562) 925-7100 or email [email protected]. You can also see the full range of what we offer or book a call.
Frequently Asked Questions
Does my business file the FBAR, or do I file it personally?
It depends on your structure and who holds or controls the accounts. An entity with its own foreign accounts may have its own filing obligation, while you may separately have a personal one covering accounts you own or can direct. Both can apply at once, and determining this correctly at the outset avoids duplicated or missed filings.
I only have signature authority and own none of the money. Do I still report it?
Yes. Signature authority alone creates a reporting obligation, because the test is control rather than ownership. Reporting the account creates no tax consequence for you, so the disclosure costs nothing while omitting it carries real exposure.
My foreign-owned LLC had no income. Do I still file Form 5472?
Almost certainly yes. Form 5472 reports reportable transactions with related parties, including capital contributions and loans, not profit. A dormant foreign-owned single-member LLC commonly still has a filing requirement, and the penalty for missing it starts at $25,000 per year regardless of activity.
If I file Form 8938 with my return, does that cover the FBAR?
No. They are separate filings with separate thresholds, going to different places. Form 8938 goes to the IRS with your return, while the FBAR goes to FinCEN through the BSA E-Filing System. Many business owners owe both, and satisfying one does nothing for the other.
Can a business catch up on missed years without penalties?
Often yes, where the failures were non-willful. The Streamlined Filing Compliance Procedures and the Delinquent FBAR Submission Procedures both address late FBARs, and reasonable-cause relief may be available for information returns such as Form 5472. Acting before the IRS makes contact materially improves the outcome.
Libre Professional Services provides bookkeeping, accounting and tax for business owners. For a compliance review, call (562) 925-7100 or email [email protected].
Disclaimer: This article is general information, not tax or legal advice, and does not create a client relationship. Reporting obligations depend on entity structure and individual facts. Penalty amounts are inflation-adjusted annually, so confirm current figures before relying on them.